Capitalization rates for different types of commercial properties in Bangkok, Thailand for the year of 2020.

Table No.1: A Summarization of the Rate of Return from an Investment in Different Types of Real Estate in 2017 (Cont.)

Types of Real Estate

Explanation

Warehouse/factory

After the big flooding in the last quarter of 2011, the situation of warehouse and factory was facing an uncertainty in the following year. In 2013 and 2014, the situation started to recover. However, in 2015-2017, the yield began to decline again due to the higher cost of land. Moreover, the low expansion on the countries’ export sector for a long period of time created an oversupply of warehouse/factory which causes a lower return as well. Fortunately, the export sector shows a good sign in the second half of 2016, which can definitely create a demand for warehouse/ factory in 2018.

Department Store

The situation of department store in CBD has been declined since 2014 because of a sluggish economy of Thailand. The rises of a household debt also impacts the purchasing power of the citizen. In 2016, many developers slow down their investment in new projects. However, with the purchasing power of tourists in inner Bangkok, the situation of department stores in CBD is still brighter than the one outside the area. In 2017, an increasing trend of shopping online may impact and lower the yield from investing in this type of property.

Office Building

Office building market has been stagnant for the last 10 years. Yield has continued to decline due to the higher cost of land in CBD area. However, the rental of the existing office buildings in the market has increased especially A-grade office building. The occupancy rate is 95% or higher because there is no new supply enters the market, which, in the case, the rental may be rising up in the future. In addition, the open of AEC will also increase the demand of A-grade office building. Some of the old office buildin1.gs are now starting to renovate for more power to raise their rental rate. Because of high occupancy rate in the inner part of Bangkok, the situation of the office building in the outer part of Bangkok is getting better.

Serviced
Apartment

The market of the serviced apartment (for foreigner) has always been in the same direction with the office building market. In 2014-2015, the yield is still stable but having an increasing trend from a possible rental increase in the future. Moreover, with the open of AEC, there will be more demand of office space in the market which will lead to an increasing demand of the serviced apartment as well. Especially in shopping area, such as Patumwan or Ratchaprasong, some apartments might rent out their units in a daily basis like a hotels they can take advantage from an expansion of tourism sector in 2015 and 2016 (some apartment may even register some part of their rentable space as hotel).

Apartment

The apartment market for foreigner in the inner part of Bangkok, especially in Sukhumvit area, has an increasing trend because of the investment from foreigner. However, the yield from apartment market for Thai customer face an opposite direction because of the booming of condominium market.

Hotel

The situation in 2014 faced a downward trend from a declining in tourist sector (in 2010 expand 11%, in 2011 expand 19%, in 2012 expand 15.98% (22.3 million people),in 2013 expand 10%(24.5 million people), in 2014,reduce 6.6% (24.0 million people), in 2015 28.0 million people, in 2016 expand to 30.0 million people, in 201735.0 million. However, taking action on the hotel that have no permission will reduce the supply in the market, but could be good for the hotel with permission.